In brief
Earnings Update
- Subdued Costs and Non-Core Revenue Support Bottom-Line Growth: Kasapreko reported a 23.3% y/y surge in net profit to GHS 185.8mn, supported by revenue growth, improved cost efficiency, stronger finance income and higher contributions from other income. Operating expenses increased modestly by 3.0% y/y to GHS 262.4mn, below the single digit average inflation of 3.8% in 1H2026. The modest growth in OPEX was due to a reversal of other expense of GHS 35.4mn in the prior year to other income of GHS 42.5mn. In our view, the modest revenue growth suggests that demand recovery remains more gradual than anticipated, despite the favourable macroeconomic backdrop. However, we expect sales volume in 2H2026 to support revenue as first line of Adeiso factory comes onstream in late 3Q2026, particularly the water bottling line expected to add about two million bottles per month.
Strategic Near-to-Medium-Term Outlook
- Successful Execution of Adeiso Factory Construction to Drive the Next Re-Rating: We maintain our Hold rating on Kasapreko (as indicated in our IoC) despite our constructive medium-term outlook. Since listing on the Ghana Stock Exchange (GSE) on 15 June 2026, the stock has appreciated by 65.8% from its IPO price of GHS 1.20 to GHS 1.99 as of 04 August 2026. The strong post-listing performance strengthens our view that the IPO was priced at an attractive valuation and that the market has re-rated the stock in recognition of its growth potential. At the current price, however, we believe investors will adopt a wait-and-see approach as the post-IPO valuation upside has been fully captured with focus now on the factory execution and earnings delivery. While we remain optimistic about the company’s long-term prospects, we believe further upside will depend on the successful execution of the Adeiso expansion project and the company’s ability to translate the additional capacity into stronger sales volumes and earnings. We also expect 2H2026 performance to provide greater clarity on the sustainability of revenue growth, margin expansion, and the financial benefits from the company’s strategic initiatives. Consequently, we believe the current valuation broadly reflects the near-term growth outlook, warranting a Hold as we maintain our fair value at GHS 2.12 with an upside of 6.5%.
- Excise Duty Reform to Support Margin Expansion: During the mid-year 2026 budget review, the Ghanaian Treasury announced a removal of the 20.0% excise duty on locally manufactured fruit juices. We expect Kasapreko to benefit from the proposed softening of production tax burden for local fruit juice manufacturers. The tax reform should reduce production costs and improve pricing flexibility. Management could either retain the savings to expand margins or pass part of the benefit to consumers to stimulate demand and strengthen Kasapreko’s competitive position. Following legislative approval of the tax removal, we expect the financial benefits to begin flowing through from 4Q2026.
- Seasonal Demand to Support Near-Term Revenue Growth: We expect revenue growth to strengthen in 4Q2026, supported by higher consumer demand during the festive season and warmer weather conditions, which typically drive stronger beverage consumption. We also expect the contribution from the Adeiso expansion to improve product availability and support the company’s ability to meet seasonal demand. These factors should provide a meaningful uplift to revenue and profitability by FY2026.
Key risks to valuation
- Execution delays at the Adeiso factory construction, Higher-than-expected inflation, foreign exchange volatility, elevated interest rates, utility tariff hikes, rising energy prices, intensified competition, unfavorable tax policy shifts and increase in raw material prices.